April 10, 2008 – Nebraska taxpayers who file federal taxes without itemizing will be able to take advantage of a new standardized tax deduction for property taxes passed by the Senate today and pushed by Nebraska’s Senator Ben Nelson.
Nelson joined a bipartisan coalition in voting to pass legislation aimed at addressing the troubled housing market. Included within the bill is a version of legislation championed by Senator Nelson that would create a new, standard deduction for real property taxes for homeowners who do not currently itemize their deductions.
“It is important that we address the housing crisis, which is a big factor in our current economic troubles,” said Senator Nelson. “Recent data shows that foreclosures are continuing to rise in Nebraska. This bill will help homeowners keep their homes while helping businesses and communities hurt by the housing crisis recover and create new jobs.”
The bill provides $10 billion to help families refinance out of bad loans and modernizes the Federal Housing Administration (FHA) to provide greater access to home loans. It also provides $100 million for counseling to help those at risk of foreclosure. Four billion dollars will go to cities to redevelop foreclosed properties so they don’t remain vacant and protections will be put in place to prevent veterans from foreclosure.
Also included in the bill is a provision pushed by Nelson and others to strike a more equitable balance between itemizers and non-itemizers. Middle-class homeowners today are feeling greater pressure due to rising property taxes, signaling a need for homeowner tax relief. Nearly 250,000 Nebraska homeowners do not itemize their deductions; this provision will extend the opportunity for a property tax deduction to all homeowners. Taxpayers would be allowed a deduction of up to $500 for a single filer or $1000 for joint filers on this year’s taxes. This would be in addition to the standard deduction for non-itemizers.
“The total number of Nebraska taxpayers who took property tax deductions in 2005 was less than half of the owner-occupied homes in Nebraska,” said Senator Nelson. “People should not be penalized by not accessing the property tax deduction just because they don’t itemize. I am glad that this legislation was passed as part of this important housing bill.”
Less than one third of all Nebraskans itemize their deductions on tax forms. Only 12% of Nebraska filers with adjusted gross incomes under $50,000 claim the real estate tax deduction, while fewer than half the taxpayers in the $50,000-$70,000 range do so.